Cauldron Energy Ltd (ASX:CXU) is strengthening its position in the Victorian Goldfields by executing an agreement to acquire a majority interest in the highly prospective Blackwood Goldfield.
The company has executed a Heads of Agreement (HOA) to acquire an initial 51% in the Blackwood Gold Project 40 kilometres ENE of Ballarat with the opportunity to increase to 65% and 80% by completing further milestones.
This intended acquisition centred on the historic Sultan mine complements Cauldrons recent Bullarto South acquisition and will give the company around 160 square kilometres, which is the majority of the Blackwood Goldfield.
Path to production
Cauldrons chairman Simon Youds said these projects provided a pathway to near-term production of gold and short-term generation of cash-flow.
Victorias Golden Triangle area, which saw Australias largest gold rush in the early 1850s, is again attracting strong interest as modern exploration techniques are revealing golden opportunities.
Simmons Reef, Mount Blackwood (portrait by Elizabeth Shepherd circa 1850s).
The renewed goldfields interest has been sparked by the transformation of the Fosterville Mine, just 75 kilometres north of Blackwood, and the discovery of extremely large and high-grade extensions deep underground.
Fosterville success
This has converted Fosterville from a modest-scale operation of less than 100,000 ounces of gold annually to be the worlds richest mine and one of Australias top five gold producers with targeted production of between 570,000 and 610,000 ounces for the 2020 financial year.
Kirkland Lake Gold Ltds (NYSE:KL) success at Fosterville and more recently by Catalyst Metals Ltd (ASX:CYL) at its North Bendigo project and Stavely Minerals Ltd (ASX:SVY) at its Ararat project have contributed to the renaissance.
Historic production
Blackwood Goldfield, which has been largely forgotten, produced a large amount of high-grade gold from near-surface historical mining and chairman Youds said that potential remained for large tonnage high-grade gold, down-plunge and along strike of workings.
Blackwood Gold Project location and Victorian structural zones with historic gold production.
From 1864 to 1960 this goldfield produced about 218,000 ounces of gold from orogenic gold sources and from placer sources worth about $280 million at todays gold price.
Gold was won down to a depth of 100 metres below surface, with very little mining activity below a depth of 150 metres.
Sultan mine is the deepest in the goldfield with production levels at 230 metres below ground surface and its shaft reaching 274 metres, and still in pay.
This mine historically produced a little over 73,000 ounces of gold at an average grade of 28 g/t.
Gold production from various reef sources in Blackwood Goldfield.
“Exceptional” prospectivity
The companys CEO Jess Oram said there was exceptional prospectivity along nine extensive lines-of-lode that were open and were proven past gold producers.
The most notable of these are:
- Simmons to Sultan line-of-lode extends in excess of 4 kilometres and is historically the highest producing mine;
- Grace Edgerton Reef contains high-grade gold mineralisation with a defined Exploration Target that remains open; and
- Yankee to Countess line-of-lode is marked by a high-density cluster of historical workings and only tested by shallow drilling.
Vendor Blackwood Gold Mines Pty Ltd has spent 25 years consolidating the leases of the project area, which provide an opportunity for systematic exploration and development over the entire goldfield.
High-priority targets
Cauldron has identified at least three high-priority targets, allowing the possibility for:
- Near-term cashflow from operations at Nuggety;
- Resource extension along line-of-lode from Simmons Reef to Sultan Reef; and
- Resource definition drilling on the line-of-lode between Yankee to Countess gold reefs.
The project contains in excess of 250 underground workings and mining activity on reef structures in the goldfield halted at shallow depths.
In most cases this was not due to depletion of mineralisation but to other factors such as inability to cope with high groundwater flows in the workings or inability to raise the capital for development work.
EL5479 Prospect location map and mines of Blackwood Goldfields.
The HOA provides for:
- An initial 51% interest in the Blackwood Gold Project;
- The potential to increase its ownership interest to 65% by collecting sufficient geological data to report a JORC 2012-compliant mineral resource having a gold mass of at least 300,000 ounces; and
- The potential to increase its ownership interest to 80% Read More – Source
